7/11/15

Here’s what happened in the San Francisco Commercial and Residential Real Estate markets since 6/7:

 

143 2nd street a 19,449 office space over retail sold for $16.1M or $829 per square foot which is a great price considering the location and leases in place: “143 Second Street presents an opportunity for an investor to acquire a 100% leased and fully renovated trophy creative space building in one of the most sought-after and dynamic office submarkets in the United States. The 19,449 rentable square foot building stands five floors over a finished basement and is leased to six tenants. All office floors are leased to single tenants and have recently been renovated with high-end exposed brick creative space improvements. One office floor lease expires every year from 2016-2019 beginning with the 2nd floor in 2016, which is currently 41% below market rent. Half of the ground floor retail space was recently leased to Jersey, a restaurant owned by the founders of Salt House, Town Hall and Anchor & Hope. The other retails tenant Steff’s Sports Bar expires in 2017 and is 27% below market rent.143 Second Street is ideally situated in the Second Street Corridor where SoMa meets the South Financial District and just 1.5 blocks to BART/MUNI. Its prime Second Street Corridor location between Mission and Howard Streets is the most coveted creative space location in the City as evidenced by the recent $71 IG lease for the 4th floor. The property is adjacent to the new $4.5 billion Transbay Terminal project which when completed will further enhance 143 Second’ s centralized location for decades to come. The South Financial District is recognized as the premier office submarket in San Francisco and consistently outperforms all other office submarkets in the City. The SFD consists of approximately 21 million square feet of office space and offers unparalleled access to high-end amentias including restaurants, luxury hotels, boutique retailers, cultural attractions and abundant nightlife. The SFD has also experienced tremendous residential growth with 2,600 units recently completed, under construction or planned for completion by 2018.” Seller is Miami based.

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552 Brannan Street may soon see 77 residential units over commercial. It is part of the Central Soma plan, which could allow height rezoning.

 

In the past, in order to make it difficult for anyone to find out the sale price of a property, sellers asked that transfer tax be recorded separately from the deed. If you know the transfer tax you can calculate sales price. Now SF mandates that the transfer tax should be recorded on the deed itself.

 

Transbay Parcel F between First, Second, Howard and Natoma Streets will go for Sale in September. Transbay Joint Powers Authority is soliciting bids but the starting price has been set at $160M which is justified by the fact that the parcel sized for a up to 750 feet in height. Hines ended up paying $192M for the site of the Saleforce Tower. We expect a much higher price for Parcel F.

 

Lennar’s San Francisco Hunters Point Shipyard is a 700 acre redevelopment project, which includes the former Candlestick Park. Tech companies are rumored to be looking at 3M square feet of office space and it could very well end up leasing to a single tenant. SF State will have a campus; a mall is planned but also 12,000 homes. All of this will take place between 2018 and 2021 after a major radiological contamination clean up.

 

Oakland is very much becoming what Brooklyn was to Manhattan and it is a propos that a Brooklyn based developer L+M is developing 275 residential units by the Fruitvale Bart Station at 35th avenue and East 12th street. We don’t know if they are going to be condos or apartments.

 

77 residential units will be built at 552 Brannan by the train station no word whether they will be apartments or condos.

 

Latham Square at 1611 Telegraph Ave. in Oakland is reaching out to SF Tech tenants. The 100,000+ sq. ft. office building is asking $40 per sq. ft. per year and is almost 70% leased. The Rotunda next door is running out of space as well and the demand for the Sears building is extremely strong. Needless to say the same goes for Oakland’s iconic class A buildings such as Kaiser Plaza.

 

Seth Hamalian is working on one of the most exciting projects we have seen in a while namely transforming the 21 acre Portrero power plan site into a3M square feet Commercial/Residential project. We predict a major success and you read it here first. Remember we were bullish on Oakland 3 years ago…Unlike the Potrero Power plant, the Hunters Point power plant is not getting any interest from developers despite the fact that the 30 acre site just finished soil clean up.

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As of October 1, TRID will replace the Truth in Lending Act (TILA) and the Real Estate Settlement Procedures Act (RESPA) forms that lenders have provided to consumers who are applying for mortgage loans. Under TRID, the Good Faith Estimate (GFE) and initial TILA Disclosure will be combined into one form, the Loan Estimate, which must be delivered three days after receiving a consumer’s application. TRID also combines the HUD-1 and final TILA Disclosure into another form, the Closing Disclosure, which must be provided to consumers at least three days before a loan is consummated.

 

The Divisadero Touchless carwash site will become about 160 residential units over commercial. No word as to whether condos or apartments.

 

Being in the trenches ourselves we can confirm that sub-leases are up and that means that Lessees growth is not matching their forecast. Nothing more and nothing else in our opinion. We came across a stat that indicates that SF has close to 2M of sub-lease space the highest level since 2009 but to us it is not a sign of bubble or anything else. It is a hot market and unprecedented demand for office implies more sub-leases period. We also disagree forecasts that the office market is flattening. We think it will hit $100 per sq. ft per year before 2017.

 

600 Harrison St. a 218,000 sq. ft building across Kilory’s 303 2ndpreviously home of UBM signed Udemy for close to 40,000 sq. ft of space. Udemy joins ABM and IZ-ON Media.

 

77 Residential units over commercial coming to 552 Brannan. No word as to whether condos or apartments.

 

We’ve had a hard time finding office space for clients in the San Mateo area, which was depressed only two years ago. The tight market is getting even tighter now that Netsuite and Go Pro both expanded on Campus drive.

 

555 Fulton,  a 139 unit condo complex will start selling in Hayes Valley in September.

 

NRG Energy leased 51,000 sq. ft. at 101 California a 288,000 sq. ft. building and Fidelity about 32,000 sq. ft. The terms of the deal are not known.

 

350 units between 547 and 557 Howard will most likely be a mix of condos and hotel room

 

Excellent pipeline of residential projects list by our colleagues from the Business Times along with the 25 largest construction projects:

SF Residential Pipeline

SF Commercial Pipeline

 

More office space about to hit the market: 181 Fremont with about 435.000 sq. ft., about 700,000 sq. ft at Kilroy’s Mission Bay site (the Exchange at 16th and Mission) and 56,000 sq. ft. at 85 Buxom.

 

The gas station across Mosso at 5th and Folsom hit the market at a low price of $2M despite the fact that it is part of the Central Soma area upzoned for development. It is true that unentitled sites such as this go at a discount and it is also true an environmental clean up may be costly but still a $2M price tag is low…

 

75 Howard will be 133 condos over commercial.

 

363 6th Street across from the End-up will be 104 residential units over commercial and no word as to whether condos or apartments.

 

1155 Market Street a 140,000 sq. ft. office building could sell for more than $700 per sq. ft.

 

Kilroy purchased a fully entitled site 143,748 sq. ft. site at 100 Hooper street for $78.0 million or $543 per square foot. Kilory plans 450,000s q. ft of mixed us space: mostly office space and about 20& PDR.

 

New Relic leased 56,000 square feet at 123 Mission St.expanding from the 74,000 sq. ft it has at 188 Spear.

 

655 Folsom site of the Canton restaurant will be 84 condos over commercial. No word as to what where the 240 units project at 667 Folsom and 120-126 Hawthorne next door is at and whether it will be condos or apartments.

 

We keep advising owners and investors to entitle their land and buildings, which is the best protection against eminent domain and a sure way to increase the value of the property. Proof: SF paid $18.5M for 490 South Van Ness a site with was purchased for $2.65M by a developer who entitled it for 72 units.

 

 

 

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